UK Employment Data Analysis and GBP/USD Market Reaction

Posted Tuesday, October 24, 2023 by
Arslan Butt • 2 min read

The Office for National Statistics (ONS) disclosed on Tuesday that the UK’s ILO Unemployment Rate saw a minor decline to 4.2% for the quarter leading to August. This is in contrast to the 4.3% rate observed in the preceding three-month period ending July. Market experts had projected a consistent 4.3% for the reviewed duration.

Delving deeper, the data indicated a considerable surge in individuals claiming unemployment benefits in September, with an increase of 20.4K. This contrasts starkly with the modest 0.9K rise observed in August and the projected 2.3K increment.

In terms of employment changes, August witnessed a reduction of 82K, which, although significant, is less than the 207K decrease reported in July and the predicted decline of 198K.

The ONS, in its Monday statement, announced plans to unveil a novel series, leveraging more data sources to refine employment, unemployment, and inactivity metrics for the recent two 3-month intervals. However, the unadjusted data from the June to August Labour Force Survey (LFS) will not be unveiled.

The organization postponed the employment statistics announcement by one week to enhance data accuracy. Nevertheless, wage inflation data was timely presented on October 17.

Wage inflation in the UK, delineated by the Average Earnings Excluding Bonus alteration, experienced a 7.8% three-month YoY elevation in August. This is marginally less than the 7.9% enhancement observed in July, as per the partial labor data from ONS from the previous Tuesday. Market projections had estimated this 7.8% growth.

Market Response:

Despite the varied UK employment statistics, the GBP/USD pair exhibited negligible response. Currently, it’s experiencing a 0.14% ascent, standing at 1.2270.

Technical Outlook for GBP/USD

The GBP/USD pair demonstrated a robust surpassing of the 1.2205 marker, negating the head and shoulders pattern, and seems to be on a recovery trajectory. It is nearing the 1.2297 threshold, equating to the 23.6% Fibonacci correction for the descent spanning 1.3142 to 1.2037. A breach here could signify additional growth, potentially reaching 1.2490 in the near future.

Consequently, a bullish inclination is anticipated for the forthcoming sessions, possibly interspersed with some lateral movements influenced by stochastic downturns. It’s crucial to note that failure to surpass the 1.2297 barrier could halt this optimistic outlook, leading to potential devaluation. For the day, the anticipated trading spectrum is between 1.2200 (support) and 1.2365 (resistance), with a predominant bullish forecast.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments